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Outline and evaluate the different perspectives on strategy formation.

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1 (a) Outline and evaluate the different perspectives on strategy formation. In the post war years business strategy has been at the forefront of the ethos behind many companies. Business strategy has now been thoroughly analysed and researched and many different models and beliefs have emerged. There are now many 'ready made' strategies for companies to draw on. From the rigid approach of Michael Porter, through a less rational and so called 'softer' approach of, for example, Mintzberg and on to a 'postmodernist' view of strategy by, for example Volberda. Richard Whittington (2001) clearly outlines four generic perspectives on strategy into which the prominent strategies of the last fifty years can be categorised. These are: * Classical * Processual * Evolutionary * Systemic Whittington cites that the classical approach is highly rational. Seeing a company as a pyramid structure and commands coming from the top and leading the bottom. 'For Classicists, profitability is the supreme goal of business and rational planning the means to achieve it' (Whittington 2001 p. 11). On the surface, a rational and clear strategy leading from the top appears to be an efficient way to run a business. There is a clear and defined (Porterian) strategy and everyone has a place within this structure and knows exactly what it is and what is expected of them. I would argue, though, that if we look below the surface or look at any company structure, we would be hard pressed to find an example where this rigid and firm approach is actually used to full effect in reality. The main argument for this is that far from the rational model presented to us by the classicist approach, companies, industry and indeed the humans who work within them are far from rational. The classicist approach involves long term goals, often heavily financed. The companies who may employ this approach are putting much store into one inflexible way of gaining the competitive advantage. ...read more.


This quote would suggest that if there were to be integration or a contribution made to the strategy process, then the organisations strategy would have to be a classical one. I would argue though, not to the strategy formation process. If an organisation has a set, clear strategy with long term goals, then it will be far easier for a personnel specialist to formulate their own strategies to fit in or integrate with this. For example, if we take an established organisation, which has a firm, rigid and clear strategy, the personnel specialist can mould its recruitment policies to fit and compliment this. So some of the practical contributions a personnel specialist could make to a classical ('fits' with Legge's normative model (1995 p.3) of personnel management) strategy would be as follows, * Manpower planning, if the organisation has long term goals then this would include forecasting staffing levels for the future * Recruitment and selection, the organisation may have planned exactly the sort (education level & personality) of individuals it wishes to recruit * Training and development, in order to fulfil the long term goals the training budget would be targeted at specific areas of the business * Reward and recognition, again to reward those achieving the set targets This very rational and clear approach could be see to be over simplistic, indeed as Sisson's (cited in Legge 1995 p.118) research showed ' 84 per cent of head office managers claimed that their company had an overall philosophy about employee management.' From this quote we could be led to believe that the personnel function is succeeding in contributing significantly to the strategy process, however, Sisson's study went on to say (Legge 1995 p.119) 'the general weight of evidence could seem to confirm that most UK owned enterprises remain pragmatic or opportunistic in their approach.' This reiterates the unrealistic nature of the classical approach and also suggests that even if the personnel specialist has formulated a personnel strategy, line managers, to suit the immediate needs of the business, will manipulate it. ...read more.


I propose the following enhancements to HR activities that will facilitate a greater contribution to strategy formation. HR makes vision a reality. There are four critical points to consider: 1. HR must be effective and capable, aligned to what the company wants to achieve. Capabilities such as skills, leadership and management to deliver the companies strategic goals. 2. Effectiveness of people. We should aim to gain 20% more from employees than other companies do. This includes motivating people to deliver more. Work on the cultural values of the company; instil a performance culture with individuals rewarded accordingly. Make this 'a good place to work'. New ideas scheme to capture ideas and share best practice. 3. Agility, the market moves very quickly. Greater clarity of job change management. Performance management and strong learning culture all focussed on long tem goals. 4. Internal HR objective, aim to achieve benchmark levels of HR. Measure the effectiveness of this. Invest in a self-service portal to facilitate self-management. Setting and managing policy. I propose 7 programmes over 12 months. 1. Project 2002. Managing the downturn in demand. Namely, managing people out of the company and 'rightsizing'. This is largely to be implemented through a massive programme of voluntary redundancy. 2. Performance management. Ensuring that appraisals are regular, thorough and valuable. In order to align people to the attainment of goals. 3. Review of the organisation 4. Leadership development 5. Outsourcing project to ensure that relevant function are outsourced to a service partner 6. Online learning - Company X 'college' 7. Performance measurement and metrics. Based on targets. Share ownership scheme (used to allocate free shares to all) will now allocate to all staff, only if specific targets are met. All members of staff at all levels will be responsible for their own learning and development although this is to be facilitated by line managers. It is also important that all levels of staff understand that they are vital for the success of the company. This is underpinned with the allocation of free shares only if targets are met (sharing in success). ...read more.

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